After Years of False Hopes, Signs of a Turn in Housing
By BINYAMIN APPELBAUM
Published: June 27, 2012

WASHINGTON — Announcements of a housing recovery have become a wrongheaded rite of summer, but after several years of false hopes, evidence is accumulating that the optimists may finally be right.

The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames.

Joe Niece, a real estate agent in the Minneapolis suburb of Eden Prairie, said he recently concluded a streak of 13 consecutive bidding wars over homes that his clients wanted to buy. Each sold above the asking price.

“I just had a home that wasn’t supposed to go on the market for two weeks sold before it even went on the market,” Mr. Niece said. “It’s definitely a lot different than what we saw” during the last few summers.

Like the economic recovery that began three years ago, what happens next is likely to prove a little disappointing. The pace of recovery will probably be slow, and the prices of many homes will continue to decline.

Millions of people remain underwater, owing more on their homes than the homes are worth, and unable to sell. Millions of families still face foreclosure. And a setback in the still-fragile economic recovery could easily reverse the uptick in housing prices, too.

But roughly six years after the housing market began its longest and deepest slide since the Great Depression, a growing number of experts and people who actually put money into housing believe the end has come.

“Our sense is that the market is recovering, and we’re extremely confident that it’s not going to get worse,” said Ronnie Morgan, a San Diego real estate professional who recently created a $10 million partnership to buy foreclosed homes. The group, Alegria Real Estate Funds, already has bought about 20 homes in suburban communities, most of which they plan to hold as rental properties.

“It feels very much like we’ve hit a bottom and we’re starting to come off of that bottom,” said Stuart Miller, chief executive of Lennar, a major national home builder based in Miami. The company said Wednesday that second-quarter profits were higher than expected, and orders for new homes rose 40 percent.

The trend is clear in the data. The widely respected S.&P./Case-Shiller index reported earlier this week that sales prices for existing homes rose in April for the first time this year. Several other measures, including a seasonally adjusted version of the index, show that price increases began in February. The pace of housing construction has increased. And the National Association of Realtorssaid Wednesday that pending home sales climbed to the highest level since the end of a federal tax credit for first-time buyers in September 2010.

This is the fourth consecutive year that the housing market has shown signs of revival, and each previous episode ended with prices renewing their downward slide.

But with each passing year, an eventual recovery has grown more likely. Prices have continued to fall, and the economy has continued to recover, a combination that has expanded the pool of potential buyers. The population has continued to grow while few new homes have been built.

Basic indicators of market health that bulged during the bubble, like the ratio of housing prices to income, have returned to more normal levels.

Government efforts to help homeowners have intensified, allowing more borrowers to refinance or avoid foreclosure.

“All bets are off if anything happens to the economy, but apart from that, I think the fundamentals look better than they’ve looked in 17 or 18 years,” said Richard K. Green, a professor of real estate at the University of Southern California.

Professor Green cited the combination of rising rents and low mortgage rates as a powerful inducement to potential buyers, both renters who would prefer to own and investors who want to become landlords.

“Compared to a lot of other investments right now this looks pretty good,” he said.

The influx of investors is a major reason that the market is looking stronger. Mr. Morgan, 56, built apartments before the housing crash. In 2010, seeing a new opportunity, he and some friends started bidding at the foreclosure auctions then held on the steps of the San Diego County Courthouse.

At first they bought properties to renovate and resell. Now they are focused on potential rental properties in the kinds of gated, planned communities in suburban San Diego that once were populated almost exclusively by people who owned their homes. Some of their tenants are former homeowners.

And competition has increased. The auctions were moved from the courthouse steps last year because the crowds had grown too large.

“There’s not a whole lot of other places to put your money,” Mr. Morgan said.

There are still reasons for caution. An unusually warm winter seems to have given a temporary and misleading boost to a range of economic indicators.

The pace of economic growth remains slow and fragile, shadowed by the risk that politicians in Europe and Washington will fail to address looming problems.

And the rise in prices is happening despite the vast number of vacant houses awaiting buyers, up to two million more than the normal level, with several million more houses still at risk of being foreclosed.

But this “shadow inventory” is not distributed uniformly, according to a new analysis by Goldman Sachs. Even within metropolitan areas like Phoenix, the vacant houses are clustered in less desirable neighborhoods, while buyers are seeking homes in areas where there are few vacancies.

Under these circumstances, the researchers concluded, “It is possible for us to see both house price increases and excess housing supply at the same time.”

Indeed, in a growing number of areas demand for homes is outstripping supply.

Mr. Niece, the Minnesota real estate agent, said he and his partner had seen their book of listings decline from about 120 properties to 70 properties, about 45 of which already are under contract.

“I have buyers every single day complaining that they can’t find houses,” he said.

Driving through a neighboring suburb last week, Mr. Niece said that he passed a sign outside another real estate office that read, “The market is great. We’ve sold all of our inventory. We need listings.”

The housing recovery is smoke and mirrors. How many people are holding mortgages on houses they can't sell because their value has dropped to 50% or lower than when they bought them?

I doubt that a full recovery for real estate will be achieved in 2013. With the change in taxes there will be less dollars to spend for a home. The Bush era tax cuts were extended for those below $400,000 - $450,000 but the taxes will not stay at the same level for those under the figure used. Not only will there be more income taxes deducted from your pay but there will be added taxes taken for the Affordable Health Care Act.

The fiscal cliff was avoided at a cost of the debt ceiling being raised another $4 trillion over the next few years. Borrowing money that will never be paid back is still wrong and will always be wrong.

The housing recovery is smoke and mirrors. How many people are holding mortgages on houses they can't sell because their value has dropped to 50% or lower than when they bought them?

I doubt that a full recovery for real estate will be achieved in 2013. With the change in taxes there will be less dollars to spend for a home. The Bush era tax cuts were extended for those below $400,000 - $450,000 but the taxes will not stay at the same level for those under the figure used. Not only will there be more income taxes deducted from your pay but there will be added taxes taken for the Affordable Health Care Act.

The fiscal cliff was avoided at a cost of the debt ceiling being raised another $4 trillion over the next few years. Borrowing money that will never be paid back is still wrong and will always be wrong.

Thats an impressive amount of wrong all in one post.

__________________
Homer: [looking at watch] Two hours? Why'd they build this ghost town so far away?
Lisa: Because they discovered gold over there!
Homer: It's because they're stupid, that's why. That's why everybody does everything.

I would concede that many of the states in the middle of the country may have kept a stronger housing market than the large metropolitan cities on either coast. I saw an 800 Sq ft. house with about 3/4 of an acre of land sell for $1,000,000 in the South Bay in California. That same house and land would probably go for $20,000 in the middle country.

That was a whole batch of no proof to the contrary. Shoot holes in my comments. Tell me about the house you bought for 1/2 it's value or the house you sold and recouped all of the money you had in it.

OK

Quote:

Originally Posted by CLX

The housing recovery is smoke and mirrors. [Wrong, as a number of articles in this thread support, the recovery has been sustained and is picking up steam and projected to continue, even feeding back into the labor market now with construction employment up 3% in today's report] How many people are holding mortgages on houses they can't sell because their value has dropped to 50% or lower than when they bought them? [Certainly less than a year ago]

I doubt that a full recovery for real estate will be achieved in 2013. With the change in taxes there will be less dollars to spend for a home. The Bush era tax cuts were extended for those below $400,000 - $450,000 [Thus effecting less than 2% of the population, not going to dent the housing market.]but the taxes will not stay at the same level for those under the figure used. Not only will there be more income taxes deducted from your pay [Wrong. You are thinking of payroll taxes, not income taxes] but there will be added taxes taken for the Affordable Health Care Act. [Mostly wrong, most were already in place]

The fiscal cliff was avoided at a cost of the debt ceiling being raised another $4 trillion over the next few years.[VERY wrong] Borrowing money that will never be paid back [Wrong!] is still wrong and will always be wrong.

__________________
Homer: [looking at watch] Two hours? Why'd they build this ghost town so far away?
Lisa: Because they discovered gold over there!
Homer: It's because they're stupid, that's why. That's why everybody does everything.

Your position is as baseless as you are. Prove one point and I'll concede my point. The costs that are going to be incurred will raise the debt by $4 Trillion over the next few years. that will put our national debt at nearly $20 trillion within the next 4-6 years. How and when will that be paid back?

All you have is that you don't believe the conservative view of what is happening to the U.S. The cause of what is happening is not Obama's fault alone, he's had help over the past 20 or so years.

Tell me how the U.S. will PAY back the debt. We will never have a balanced budget, balanced as revenue in and the budget only spends what that revenue level is. You claim that Clinton had a budget surplus but that is WRONG, to put it in your vernacular. Clintons budget was a deficit budget and all revenue taken in was spent as was a sizable portion of the money borrowed from the Fed.

Cann, rooting against home values? Home values in the middle of the country are still stagnant. On the East and West coasts there is some modicom of improvement but the home values have still not raised enough to call the housing market recovered. A recovery would be an across the board change in the direction of home prices.

Anyone that wants to buy a home for an investment may want to find where the bottom of the housing market lies and gauge if the prices are fluctuating or if they are actually on a sustained gain. At the moment there is some movement but not enough to claim recovery in a substantial manner.

Quote:

Originally Posted by Cannibal

funny that right wingers would actually root against the housing market.

I mean, can you actually get more partisan than that? Actually rooting against your own home value? HAHA!

Your position is as baseless as you are. Prove one point and I'll concede my point. The costs that are going to be incurred will raise the debt by $4 Trillion over the next few years. that will put our national debt at nearly $20 trillion within the next 4-6 years. How and when will that be paid back?

All you have is that you don't believe the conservative view of what is happening to the U.S. The cause of what is happening is not Obama's fault alone, he's had help over the past 20 or so years.

Tell me how the U.S. will PAY back the debt. We will never have a balanced budget, balanced as revenue in and the budget only spends what that revenue level is. You claim that Clinton had a budget surplus but that is WRONG, to put it in your vernacular. Clintons budget was a deficit budget and all revenue taken in was spent as was a sizable portion of the money borrowed from the Fed.

The U.S. has run deficits almost continuously for the past 100 years, and yet we have always paid back what we've borrowed. Debt levels have fluctuated considerably in that time as well. We will probably always carry some national debt, but that is in now way the same thing as saying we wont pay back what we borrow.

__________________
Homer: [looking at watch] Two hours? Why'd they build this ghost town so far away?
Lisa: Because they discovered gold over there!
Homer: It's because they're stupid, that's why. That's why everybody does everything.

The U.S. has run deficits almost continuously for the past 100 years, and yet we have always paid back what we've borrowed. Debt levels have fluctuated considerably in that time as well. We will probably always carry some national debt, but that is in now way the same thing as saying we wont pay back what we borrow.

In the past the debt has not been anywhere near the level it is now and where it will be going due to AHCA (Obamacare) and other give away programs in the government. As it stands now our gross national product is less than the current debt. In recent years, last 40, we have never paid off the debt, we have paid towards it but I would bet we are nearing the point, if we haven't already achieved the distinction, our annual payments may not even cover the interest on the debt.

If you want to think we will pay the debt of, then more power to you. To achieve a payoff our taxes, for all people in the nation, would virtually take all of our paychecks for several years.

At the end of the day the statement stands, we cannot keep borrowing to run the nation. Revenue in to the tax coffers should be the only money the government is allowed to spend. When the money runs out what do you do? When my money runs out I can no longer purchase stuff, I do not run a deficit household.